With over 40 years since I passed the bar and in 30 years selling Medical Malpractice Insurance, few questions have been as difficult to answer as when it is appropriate to report a bad patient outcome to one’s Medical Professional Liability Insurance company.
The question is fraught with legal and practical issues: legal because there is a contractual duty to report matters that can lead to claims; and practical, because reporting bad outcomes can affect one’s insurability and qualification for claims free discounts. The question of reporting is the same whether the insured is a physician, midwife, surgery center or other healthcare provider. I will discuss the considerations below, but recommend that your read last month’s posting about demand and incident triggers because you will need to understand that topic to fully appreciate this one.
As discussed in last month’s posting, Medical Malpractice Insurance policies that have incident reporting triggers bind a company to defend any incidents reported to it during a policy term even if when the incident turns into a claim, the healthcare provider is insured with a different company. This is true even if the new company provides retroactive coverage over the dates of service on which the claim is based. On the other hand, demand trigger companies are not responsible for reported incidents until there has been a demand for money or a lawsuit has been filed. With a demand trigger policy, if one has reported an incident, the insured cannot switch to a new company until the incident turns into a claim because any new company’s policy will exclude incidents reported to a previous Medical Malpractice Insurance company. The company the insured wants to leave will not be responsible for any claims based on a previously reported incident if the healthcare provider is no longer its insured. Thus, if an insured reports an incident to a demand trigger company and switches companies, he or she will not have coverage for that incident if it later turns into a claim.
Most Medical Professional Liability policies require the insured to report incidents that are reasonably expected to lead to claims, but there is rarely a definition of what is reasonable. Also, there is a duty on the insured not to engage in conduct that prejudices the insurance company’s ability to defend a claim. Failure to give timely notice could be seen as prejudicing a company’s ability to gather up to date information needed to defend a claim.
The issue of when something is likely to lead to a claim is very subjective. Perforations during colonoscopies, for example, are serious events, but can occur without any negligence and are usually repaired with a patient experiencing full recovery. We all know that bad things can happen during medical procedures. It’s why informed consents include laundry lists of possible bad outcomes. So is this an example of something that should be reported? I don’t think so. Unless the patient has made statements that lead a physician or involved surgery center to believe a suit will be filed or if there hasn’t been a quality recovery, a perforation is a clearly indicated risk for this procedure and if properly explained to the patient, can be reasonably viewed as not expected to lead to a claim.
Let’s look at another example, an OB/GYN or Midwife who has a patient who dies during delivery of a newborn. Comparing this to the situation above, it may well be that this situation falls well within the parameters of an informed consent. However, the outcome is so severe, that reasonableness argues for immediately reporting this outcome to one’s Medical Professional Liability insurance company.
Does a request for records impose a duty to report? If a medical office routinely receives requests for records for things such as health and accident claims, a request for records may not impose a duty for one request that is any different than for other requests. Healthcare providers are not required to recognize when a request for records comes from a malpractice insurance plaintiff’s law firm. But if the request for records discloses that the records are being requested in connection with review of the healthcare provider’s performance for negligent conduct it may impose a duty to report. There is a wide range of conduct between the examples given above that may or may not reasonably be expected to impose a duty to report and healthcare professionals have to use good judgment in evaluating the decision to report or not report bad outcomes.
Given the discussion above of the downside of failing to report bad outcomes, what is the downside of reporting every possible bad outcome? Years ago, I worked with a surgeon who in over 25 years of practice had never been sued, but had reported every bad outcome, eighteen of them. He was relocating to a new state where his current company did not provide insurance and was applying for new coverage. No Medical Malpractice Insurance company in the standard market would insure him and he had to get coverage in the “high risk” market. Similar considerations can arise in “claims dumping” situations where a physician, midwife, surgery center or other healthcare provider switches companies and is advised by the agent or new company to check past medical records and report every bad outcome to the incident trigger insurance company the insured is leaving. Sounds like a good idea, but it can come back and bite you if a future switch in companies is needed since almost all applications for new coverage ask about incidents that have been reported to previous companies.
Also, many insureds are concerned that reporting claims can affect claims free discounts. This is a real concern, although some companies give claims free discounts to insureds with open incidents. Lastly, if one is insured by a demand trigger policy, reporting a case doesn’t make the company responsible to defend it until it turns into a claim. Reporting this incident will exclude any future claims on this incident from coverage by any other company an insured may want to switch to so reporting incidents can affect one’s ability to switch companies. But not reporting incidents to avoid this concern usually will not help. Many policies exclude coverage for incidents that an applicant for a new policy knew about or could reasonably have foreseen would turn into a claim. Therefore, electing not to report an incident to a current demand trigger company may not offer protection to an insured who leaves a demand trigger company.
Seeking advice on whether to report bad outcomes is one situation where calling your insurance agent may not be helpful. Insurance agents have to advise any client that asks whether an incident should be reported, to report it. This is so because insurance agents also can be sued for negligence, just like the professionals they serve. If an agent advises against reporting an incident and that incident later turns into a claim which the insurance company refuses to cover because of either a gap in coverage, prejudice by a delay in reporting or for some other reason, the agent who gave the advice not to report may be found to have been negligent in giving that advice. For this reason, if an insured calls an agent and asks, the agent has to assume that the incident concerned the insured enough to seek advice and, therefore, should be reported.
I recognize that of the blogs I have posted, and all the ones I will post in the future, this one is likely to be the least helpful in making decisions of which incidents to report and which can wait, but I hope that the discussion of the legal and practical implications help readers in thinking through the process to reach reasonable decisions. As with all such legal matters, this posting is general in nature and cannot be relied upon for legal advice. Those who need legal advice for a particular issue should consult with their personal attorneys.